Tuesday, September 02, 2014

Irreparable harm after Herb Reed

Via the Trademark Blog, this case applying Herb Reed but finding irreparable
harm based on the same reasoning rejected in Herb Reed shows just how poorly we think about trademark harm.The court first found that plaintiff showed
likely success on the merits of its confusion claim based on Gallo wines versus
El Gallo energy drinks, including the highly-plaintiff-friendly ruling that
inquiries about whether two parties are related evidence confusion (when really
they evidence some awareness that the two don’t ‘fit’ in some way; this might
however be some reason to think that other people would be confused in the case
of very cheap mass consumer goods like these).The court also denied an injunction as to defendant’s plan to use El
Gallito for energy drinks, finding that Gallo didn’t submit any evidence about
confusion as to that mark though emphasizing that it wasn’t finding that
confusion was not likely either.

Turning to irreparable injury: the court found the
declaration of Gallo’s director of marketing, Anna Bell, sufficient.She stated:

Plaintiff does not want to
associate its GALLO trademark with energy drinks because it believes that
mixing energy drinks with alcoholic beverages promotes irresponsible drinking
behavior, which is directly contrary to Gallo's philosophy. Therefore, if
consumers are likely to or actually do believe that Defendant's EL GALLO energy
drinks are in some way associated with or condoned by Plaintiff, Gallo as a
company would suffer damage to its reputation. And because there have been some
reports that drinking excessive amounts of alcoholic beverages mixed with
energy drinks could cause physical harm, the harm to Plaintiff's reputation
could be devastating.

… Further, as explained in this
Declaration, Gallo as a company is very proud of its GALLO mark and GALLO
products, and therefore exerts an enormous amount of time, energy and money on
how these marks are used in the marketplace. Gallo ensures that licensees of
its marks, like those marketing GALLO meat products and cheese, follow certain
quality standards. If Defendant is permitted to use the EL GALLO and EL GALLITO
marks for energy drinks, as mixers for tequila or otherwise, Gallo's name and
reputation are put at risk. This harm would be irreparable to Plaintiff.

Though Bell wasn’t qualified to opine that mixing energy
drinks with alcohol promotes irresponsible drinking, that didn’t matter,
because she was qualified to testify that Gallo believed that an association
with energy drinks would be harmful to its reputation because it believed that consumers would perceive
such an association as endorsing harmful and irresponsible drinking behavior.Courts (pre-Herb Reed) have said that the injury from infringement stems from
lost control over a business’s reputation, which lost control has the
“potential” to damage its reputation.Of
course, potential and likelihood are usually very different things for injunctive
relief purposes.

The court found that, though Gallo didn’t introduce
admissible evidence that association with energy drinks would harm its
reputation, “it is enough that Plaintiff has introduced evidence of loss of
control over [its] own business reputation.”But the only “evidence” of lost control, as opposed to the consequences
of that lost control, was the evidence of likely confusion.And if “lost control” is irreparable injury
regardless of whether that lost control results in any actual change to
reputation, then we’re back to presuming irreparable harm from likely success
on the merits, since it’s the likely confusion that produces the lost
control.This is the argument INTA would
like courts to agree with.(Compare Purdum
v. Wolfe, which rejected the “lost control” argument in the absence of evidence about poor quality/other actual
harm to plaintiff.)Here’s the court’s
summary, which makes clear that this is just the pre-Herb Reed rationale: “[T]rademark law affords Plaintiff the right
to control its branding and image via the legal right to control the usage of
the GALLO mark. Defendant’s actions rob Plaintiff of this control, which is a
sufficient showing of irreparable harm.”

Then the court found that, even after eBay, money damages are inadequate to remedy infringement.Gallo’s licensing agreements for use of the
mark didn’t show that damages here would be readily calculable or adequate. And
Gallo abandoned its claim for money damages, which “suggests that monetary
damages are inadequate because they are too difficult to calculate and prove.”

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